If you do not have a high income and are struggling to make ends meet while trying to save for retirement, you should be aware of the Saver’s Credit offered by the government. The Saver’s Credit is available to most people, with the exception of those that are married and have an average gross income of more than $56,500, or if you are single and make more than $28,250 a year.
You also cannot be under the age of 18 or be able to be claimed by someone as a dependant on their taxes. If you are a fulltime student, you will not qualify for the retirement saver credit.
The Saver Credit works by helping to reduce your taxes. Depending on how much you contributed to your retirement during the year, you can save from 10% to 50% of that contribution. This credit is a non-refundable credit. What this means is that the amount that you get from the credit cannot be more than what your tax liability is. This can increase your refund by reducing how much tax you owe, but if you did not owe taxes, you will not receive this money in a refund.
The retirement Saver Credit is only one of the several tax advantages to saving for retirement. With all of these tax advantages, it is in your best interest to contribute the maximum allowed to your retirement plans each year.
If you are not sure how you can use the tax laws to best benefit you when it comes to saving for retirement, you may want to contact a financial advisor to find out how you can save money on your taxes by saving for your retirement. These tools will give you a double benefit; you can save money on taxes now, and invest in your future at the same time.